LSE in u-turn over routing fee

The London Stock Exchange (LSE) has scrapped a controversial routing fee it was charging other venues for sending trades to its order book, less than five months after it was introduced.

The one-basis-point fee was first included in the fee schedule the LSE implemented on 1 November last year, but was omitted from the new schedule that came into force in 26 March.

The change of heart will be particularly good news for Nasdaq OMX Europe, the multilateral trading facility (MTF) owned by exchange group Nasdaq OMX, which is currently the only displayed MTF to offer an onward routing service.

An LSE spokesperson told theTRADEnews.com that although the exchange still agrees with the principle of charging a fee for orders re-routed to it, it felt it was not worth the effort for what it deems a “small amount of order flow”. The spokesperson also noted that identifying and separating Nasdaq OMX Europe’s flow from that of Citi – the executing broker for the MTF’s onward routing service – was an administrative burden.

The LSE introduced the fee just over a month after Nasdaq OMX Europe launched on 26 September, prompting a strong reaction from Charlotte Crosswell, the MTF’s president.

“On the face of it, this is anti-competitive and it potentially wouldn’t be in clients’ interests to include LSE on our router,” said Crosswell at the time. “I fail to understand why they would want to charge double for it, because all we are doing is adding or taking liquidity from their order book, and they are going to get their rate for that.”

While Nasdaq OMX Europe continued to route to the LSE, it did not pass on the exchange’s new routing charge to customers.